The Canadian Revenue Agency (CRA) is to begin investigating eBay Canada's more prolific sellers after the ubiquitous online auction site lost a legal appeal to keep the details of its users private.
The site has been ordered by the Federal Court of Appeal to hand over information needed to identify eBay 'Powersellers,' - those who generate at least USD1,000 (USD809) per month in sales for three consecutive months.
The ruling, delivered earlier this month, upheld a decision by the Federal Court of Canada in 2007 allowing the CRA to demand information regarding PowerSellers during the years 2004 and 2005. EBay Canada expects that the CRA will also seek court orders to obtain details about Powersellers' transactions for subsequent years, including 2006 and 2007.
To comply with the latest ruling, eBay Canada has, reluctantly, informed those members whose information must be released to the tax agency.
"This is not the outcome that we wanted, and we strenuously object to being forced to release our members’ information," lamented Scott Shipman, eBay Canada's Senior Counsel for Global Privacy Practices. "Protecting our users' privacy is of the utmost importance."
There are an estimated 32,000 powersellers registered with eBay Canada, although the application of tax laws to eBay traders is still something of a grey area, not just in Canada, but in many parts of the world. While some sellers are clearly making a substantial income from their trading activities (with many already registered with the tax authorities), for others eBay is more of a hobby that happens to supplement their income. However, experience in other countries, such as the United Kingdom, would suggest that tax inspectors are unlikely to show much sympathy for either group if found not to have declared income from eBay trading.
Those eBay Canada sellers collared by the tax man have one crumb of comfort; by voluntarily restating their taxes, they may at least be able to avoid penalties or prosecution for any irregularities that may have shown up in a tax audit.
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